Pending Private Student Loan Legislation: Do I File 7 or Wait it Out in a 13?

[currerbell]

Hey y'all - I couldn't find anything posted directly on point, so I hope this is okay. Most readers probably know about the pending legislation that would under the 2005 atrocity and allow private student loans to be discharged in BK.

I easily qualify for 7 - no assets, huge debt, job loss, failed business, medical issues, young children. It would be just me and not my spouse filing. I also have giant private student loan debt. I will be in default with the lender just by filing BK. Obviously, it is very much in my best interests to be able to avail myself of a discharge of the private student loans.

However, it is uncertain as to whether or not the bill will pass. My BK attorney has suggested that I either just go ahead and file the 7 and then default on the student loans (it is unavoidable - I can't pay the privates and they will not negotiate) or I file a 13, wait and see if the bill passes and then dismiss the 13 and file a 7 when/if the bill is law.

Any thoughts on this? I will effectively have no income (other than my spouse's), though some past-earned fees may come in. We have 2 cars - one is 13 years old and paid off, the other is 6 years old and not yet paid off. No savings or intangibles. Unless you count our obese cat.

[HHM]

You need to make your decision on the here and now.

Not sure this bill really has enough support to go all the way.

If your student loans are that far gone, sometimes it is beneficial to file the chapter 7, file the adversary proceeding to seek a hardship discharge just to get someone on the other side to negotiate with.

[currerbell]

HHM - I feel like I don't have the perspective to look at the possibility of passage objectively, so thanks. I will say that the fact that Franken's amendment to the Fin Ref bill was utterly ignored has made me think that it is less likely to happen than I had hoped.

BK atty told me I should get a divorce and then file 7 and try an AP on the student loans. I am unwilling to do that for many reasons. BK atty will also not file the AP petition, so I would be pro se on that. Have there been folks who have had an unsuccessful AP but were able to negotiate with lenders outside of it?

[HHM]

It depends, if your student loans are in "active" collection, i.e you are well beyond the 240 day (or whatever it is) default period. Then no one at the collection agency has any authority to do anything meaningful with your student loans and you are wasting time.

The emerging strategy is to file chap 7, file an AP. At which point the student loan people must hire an attorney to respond. Then there is someone to negotiate it with that has some authority, but you have to be willing to take the case the whole way. If you do it pro se, you will just get rail roaded.

[currerbell]

I am not too concerned about appearing pro se so much as I am the extra cost. And they aren't in collection. Access Group will put me in default as soon as I file; I have heard some stories that they will accelerate and call it all due. Really? I am judgment proof; I just really don't want to have to go down that road. But frankly, it's the only road in front of me. Unless Congress does something nice...

Also, I am curious as to what it is like in a 13. I have no income, it's just me filing, house is held H&W (I am not on the note, just the deed), we have two older cars with WAY over 100K miles each, two kids, zero assets (except for my super awesome education). I would have to pay student loans and car loan during a 7. What would it look like in a 13? And how bad would it be to file 13, then dismiss and file 7?

Thanks for any insight.

[bluejeans]

I may be wrong but I don't think you can file a 13 without income?